Steel Export Price may Fall to $525, Imports Crash

India’s largest steel-makers are expected to cut prices to the lowest in almost a year to cope with a glut created by surging imports from China, Russia and South Korea.

Prices of hot-rolled steel, used to produce sheets, wheels, pipes and railway tracks, may fall by more than 4 percent this month to 32,500 rupees ($526) a metric ton. Prices may not recover for a couple of quarters, unless the government acts to curb imports, they said. China is diverting supplies to exports and dampening price, it is alleged.

Hot-rolled coil prices in Mumbai have declined 10 percent since July, when imports started rising, to about 34,000 rupees a ton, excluding taxes. The rates for similar products in China tumbled 22 percent in the same period, according to researcher Beijing Antaike Information Development Co.

Earnings at Indian steelmakers are already under pressure with Tata Steel Ltd., the top producer, expected to post its lowest profit in seven quarters for the period ended Dec. 31. JSW Steel Ltd. reported its lowest profit in five quarters in the three months ended Dec. 31.

Import Pressure

Imports accounted for 12 percent of India’s steel consumption in the nine months ended Dec. 31, compared with 8 percent in the same period year ago, according to steel ministry data.

China Record

Crude steel output in China, the world’s top producer, reached a record last year, while a fall in Russia’s ruble and a free-trade accord between India and South Korea has led to a surge in imports from those nations. India, which was a net exporter of steel last year, may become a net importer of 3 million tons this year, Firoz had said in January.

At the current rate, imports may reach as much as 1 million metric tons a month, Acharya said. India’s total steel imports rose 59 percent to more than 6.5 million tons in the nine months through Dec. 31 from a year earlier, according to steel ministry data.

Chinese steel exports soared to 10.17 million tons in December from the previous month’s record of 9.72 million tons, according to data from the nation’s customs department.

India’s steelmakers are lobbying the government to restrain imports by raising taxes on shipments from overseas suppliers and also implement a December order to ensure uniform quality of the alloy being imported.

The order makes quality certification from the Bureau of Indian Standards mandatory for imported steel products.

“We are requesting the government to look at enforcing the quality order,” Acharya said. “We also expect some changes in the duty structure either in terms of normal customs duties or tariff barriers.”